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http://hdl.handle.net/10419/64244

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Value

Language

dc.contributor.author

Devaro, Jed

en_US

dc.contributor.author

Kurtulus, Fidan Ana

en_US

dc.date.accessioned

2011-09-08

en_US

dc.date.accessioned

2012-09-25T07:19:45Z

-

dc.date.available

2012-09-25T07:19:45Z

-

dc.date.issued

2011

en_US

dc.identifier.uri

http://hdl.handle.net/10419/64244

-

dc.description.abstract

We address four empirical questions in this paper. Is there empirical support for: 1) the risk-incentives tradeoff predicted by agency theory? 2) a positive relationship between authority and incentives? 3) a positive relationship between risk and authority? 4) the main testable implication of Prendergasts model, namely that the risk coefficient in an incentives regression should become smaller (i.e. less positive or more negative) when delegation of worker authority is incorporated into the riskincentives regression model? Our empirical results support affirmative answers to all four questions, though in some cases the relevant parameters are estimated with low precision. Thus, our analysis contributes to the literature by providing empirical evidence clarifying the relationship between risk and incentive pay and how managers optimally bundle incentive pay and the delegation of worker decision rights to cope with risk. In particular, we attempt to reconcile the mixed nature of the empirical literature concerning evidence for a riskincentives tradeoff by empirically addressing Prendergasts extension of the standard principal-agent model.

en_US

dc.language.iso

eng

en_US

dc.publisher

|aUniv. of Massachusetts, Dep. of Economics |cAmherst, Mass.

en_US

dc.relation.ispartofseries

|aWorking Paper, University of Massachusetts, Department of Economics |x2011-13

en_US

dc.subject.jel

D21

en_US

dc.subject.jel

D23

en_US

dc.subject.jel

D81

en_US

dc.subject.jel

M51

en_US

dc.subject.jel

M52

en_US

dc.subject.jel

M54

en_US

dc.subject.ddc

330

en_US

dc.subject.keyword

Agency Theory

en_US

dc.subject.keyword

Risk versus Incentives Tradeoff

en_US

dc.subject.keyword

Delegation of Worker Authority

en_US

dc.subject.keyword

Performance Pay

en_US

dc.title

An empirical analysis of risk, incentives and the delegation of worker authority